Nigeria’s Cement Makers Cut Finance Costs To N150.7bn In H1 2026

Nigeria’s three major quoted cement manufacturers- Dangote Cement Plc, BUA Cement Plc and HBM Nigeria Plc spent a combined N150.7bn on finance costs in the first half of 2026, representing a substantial decline from the previous year and providing a major boost to their earnings.

The three companies had incurred a combined about N267.7bn in finance costs in H1 2025, meaning that their aggregate financing expenses fell by approximately N117bn, or 44 per cent, year-on-year.

The sharp reduction highlights a significant easing in the financing burden of Nigeria’s cement industry, which has been grappling with high interest rates, foreign-exchange volatility and substantial capital expenditure requirements.

Dangote Cement accounted for the largest portion of the combined finance cost in H1 2026, with approximately N112.1bn, compared with about N216bn in H1 2025.

This represents a reduction of roughly N104bn, or 48 per cent, in one year.

The decline is particularly significant given the size of Dangote Cement’s operations and its extensive investment in production capacity across Nigeria and other African markets. Lower financing expenses helped strengthen its earnings as group revenue increased to N2.51tn, while profit after tax attributable to owners rose to N640.2bn, from N322.5bn in H1 2025.

BUA Cement also recorded a substantial reduction in finance costs, from N38.14bn in H1 2025 to N22.14bn in H1 2026, representing a decline of about N16bn, or 42 per cent.

More importantly, BUA Cement’s finance income increased significantly to N18.73bn, from N6.76bn, reducing its net finance cost to just N3.41bn, compared with N31.37bn in the previous year.

This provided a major boost to the company’s bottom line. BUA Cement’s profit before tax increased from N214.8bn to N384.4bn, while profit after tax rose from N180.9bn to N324.9bn.

HBM Nigeria also recorded an improvement in its financing position during the period, contributing to the overall reduction in the sector’s finance-cost burden. The company’s H1 2026 results showed strong profitability, with revenue of approximately N678.4bn and profit after tax of about N208.3bn.

The combined figures show that finance costs consumed significantly less of the cement manufacturers’ operating earnings in H1 2026 than they did a year earlier.

This is particularly important because financing expenses have traditionally represented one of the major constraints on the profitability of highly capital-intensive manufacturers

The reduction means that the companies were able to retain a greater proportion of their operating profits after servicing debt and other financing obligations.

It also potentially strengthens their capacity to generate free cash flow, finance expansion internally and maintain shareholder distributions.

The companies also spent a combined N1.48tn on cost of sales in the first half of 2026, representing a 8 per cent increase from the N1.37tn recorded in the corresponding period of 2025.

The increase was, however, significantly slower than the 23.7 per cent growth in combined revenue, which rose to approximately N3.92tn from N3.17tn in H1 2025.

The figures indicate that the cement producers were able to grow sales considerably faster than their production costs, resulting in improved gross margins across the sector.

The analysis, based on the companies’ unaudited H1 2026 financial statements, treats cost of sales as a broad measure of production and input costs, covering materials, energy and fuel, labour, maintenance, depreciation and other manufacturing expenses.

Dangote Cement remained by far the largest spender, with group cost of sales rising to N924.31bn in H1 2026 from N835.56bn in H1 2025, an increase of N88.75bn or 10.6 per cent.

The company’s cost of sales nevertheless grew considerably below its revenue, which increased by about 21.3 per cent to N2.51tn from N2.07tn.

Consequently, cost of sales as a proportion of revenue declined to about 36.8 per cent, compared with roughly 40.3 per cent in the previous year.

A major feature of Dangote Cement’s cost structure was the relatively stable energy bill despite higher production and revenue.

The company spent N384.49bn on fuel and power consumed during the six months, compared with N387.19bn in H1 2025, representing a marginal decline of about 0.7 per cent.

Energy and fuel therefore remained Dangote Cement’s single biggest production cost, accounting for approximately 41.6 per cent of total cost of sales.

The moderation in the energy bill helped cushion increases in other input costs, particularly materials, which rose substantially during the period.

The company’s H1 2026 production-cost breakdown shows that materials consumed increased to N225.41bn from N167.68bn, while staff costs rose to N38.84bn from N35.00bn.

Royalties increased to N8.92bn from N5.00bn, while repairs and related costs climbed to N82.70bn from N70.48bn.

At the same time, depreciation and amortisation declined to N81.27bn from N101.37bn, while plant maintenance costs fell to N86.30bn from N94.05bn.

These movements helped limit the overall increase in cost of sales.

BUA Cement recorded the slowest increase in cost of sales among the three companies, with production costs rising by only 2.7 per cent to N301.89bn, from N293.94bn in H1 2025.

The modest increase was achieved despite a 25.6 per cent jump in revenue to N728.93bn from N580.30bn. As a result, BUA Cement’s cost of sales-to-revenue ratio improved sharply to about 41.4 per cent, compared with 50.7 per cent a year earlier.

Independent analysis of the company’s H1 results also puts the cost of sales at N301.89bn, confirming the relatively limited growth in production costs.

The company’s financial statements show that energy consumption cost N135.35bn in H1 2026, up from roughly N127.39bn in the corresponding period of 2025.

This represents an increase of about N7.96bn, or roughly 6.25 per cent, putting BUA’s energy bill at almost 42 per cent of its total cost of sales.

The increase in energy spending was therefore substantial, but it was broadly in line with the company’s 25.6 per cent revenue growth, suggesting that higher energy costs were being absorbed alongside stronger sales and improved production efficiency.

BUA’s ability to keep total cost of sales almost flat despite the sharp increase in turnover was particularly significant. It helped gross profit rise by 49.1 per cent to N427.03bn, compared with N286.36 billion in H1 2025, while profit after tax surged by about 80 per cent to N324.88bn.

HBM Nigeria Plc, formerly Lafarge Africa Plc, recorded the second-fastest increase in cost of sales, with production costs estimated at about N256.6bn in H1 2026, compared with approximately N221.2bn in H1 2025.

This represents an increase of about N35.4bn or 16 per cent.

The company officially changed its name from Lafarge Africa Plc to HBM Nigeria Plc in June 2026 following shareholder and regulatory approval.

HBM’s revenue, however, increased by about 31.2 per cent to N678.41bn, according to its H1 2026 results, meaning that revenue growth also significantly outpaced production-cost growth.

The company consequently strengthened its gross margin and reported N208.35bn profit after tax for the six-month period.

The company’s cost structure remains heavily exposed to energy because cement production is an energy-intensive operation.

HBM’s financial reporting classifies fuel and power-related expenditure within production variable costs and production expenses rather than presenting all energy-related expenditure as a single line item on the face of the income statement.

Its 2025 annual report showed fuel and power costs of N173.75bn for the full year, while production fixed costs included electrical expenses.

The cost dynamics across the three companies therefore reveal an important trend in Nigeria’s cement industry: energy remains one of the largest components of production expenditure, but the producers were able to prevent the broader increase in input costs from matching the pace of revenue growth in H1 2026.

Collectively, the three companies increased their cost of sales by 8 per cent, from N1.37tn to N1.48tn, while revenue expanded by almost 24 per cent.

Consequently, aggregate cost of sales fell from about 42.6 per cent of revenue in H1 2025 to 37.8 per cent in H1 2026.

The difference was particularly pronounced at BUA Cement, where cost of sales increased by just 2.7 per cent against a 25.6 per cent revenue expansion.

Dangote also recorded a favourable gap, with cost of sales rising 10.6 per cent against revenue growth of more than 21 per cent, while HBM’s 16 per cent cost increase remained below its roughly 31 per cent revenue growth.

On an aggregate basis, Dangote Cement accounted for about 62.3 per cent of the N1.48tn combined cost of sales, followed by BUA Cement with 20.4 per cent and HBM Nigeria with 17.3 per cent.

The ranking reflects the companies’ differing production scales, with Dangote operating a much larger domestic and African production footprint.

The energy figures also highlight the continuing vulnerability of cement manufacturers to Nigeria’s high energy and logistics costs.

Dangote alone spent N384.5bn on fuel and power, while BUA spent about N135.4bn on energy consumption, meaning the two companies together committed roughly N520bn to energy and power in six months.

HBM’s energy expenditure is embedded in its production-cost classifications.
For the industry, the figures suggest that pricing power, scale economies and production efficiencies are currently providing a buffer against rising input costs.

The ability of revenue to grow substantially faster than cost of sales has allowed the companies to expand gross margins and earnings despite continued pressure from energy, raw materials, logistics and other manufacturing costs.

The trend is also significant for the broader construction market. While higher cement prices have supported manufacturers’ revenue and margins, the underlying cost structure shows that energy remains a major determinant of the final price of cement.

Any renewed increase in gas, electricity, diesel or other fuel costs could therefore quickly reverse some of the efficiency gains recorded in the first half of the year.

At the same time, the relatively modest growth in aggregate cost of sales compared with revenue provides evidence that the leading producers are increasingly capturing the benefits of scale, improved plant utilisation, pricing adjustments and tighter cost management. For investors, the key question in the second half of 2026 will be whether these gains can be sustained if energy prices, logistics expenses and other input costs accelerate.